Supant Mongkolsuthree, chairman of the Federation of Thai Industries
By The Nation
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) will ask new Finance Minister Predee Daochai to lower barriers to doing business in Thailand, said Supant Mongkolsuthree, chairman of the Federation of Thai Industries.
The JSCCIB wants the government to set up a public-private committee to boost ease of doing business. It will also ask the minister to revise arcane rules deemed to be obstacles to doing business in Thailand, he added.
The moves would boost Thailand’s World Bank ranking for ease of doing business from its current 21st
place, Supant said.
The joint standing committee will also ask the government to extend the relief measures beyond their original end dates to mitigate impacts of the Covid-19 outbreak, he said.
He said the government should also boost the property market by reducing mortgage fees and transfer fees for residences worth up to Bt50 million. This would increase demand for upscale real estate asset, which would help lift the economy, he added.
Investment in corporate bonds has improved over the past two months as investors appear to be less worried about the Covid-19 fallout, said Ariya Tiranaprakij, senior executive vice president of The Thai Bond Market Association.
The other contributing factor is that investors are looking for investments that yield high returns now that deposits are getting low interest.
She added that many firms have started raising funds by issuing bonds after having to postpone their planned bond issuance earlier.
In the first week of August, the value of issued bonds stood at Bt9.580 billion.
If the Covid-19 situation continues to improve, the association expects to see between Bt80 billion and Bt90 billion worth of bonds to be issued monthly for the rest of the year. Total bond issuance this year is expected to hit at least Bt800 billion.
Japan push to cut China reliance may be boost for Southeast Asia
EconAug 09. 2020File photo: Vietnamese authorities conduct temperature checks in an effort to contain the covid-19 outbreak.
By Syndication Washington Post, Bloomberg · Yuko Takeo, Michelle Jamrisko · BUSINESS, WORLD, US-GLOBAL-MARKETS, ASIA-PACIFIC Japan’s quiet push to protect its supply chains in the era of covid-19 may prove a boon for Southeast Asian nations looking to gain from the growing backlash against China.
The Japanese government is paying about 12 billion yen ($114 million) to 30 companies to increase production in Southeast Asia, in the first round of a multi-billion dollar program to diversify supply chains after covid-19 and worsening relations between the U.S. and China.
Japan wants to cut its reliance on China or any other individual nation and the money will hasten the trend of firms moving out of China and into cheaper neighbors like Vietnam or Thailand.
Fujikin Inc. makes parts used in semiconductor manufacturing and is one firm benefiting from the incentives. The Osaka-based manufacturer will receive subsidies worth two-thirds of its costs to shift production out of China and into Vietnam.
“We’d been thinking about increasing our capacity in Vietnam before the subsidy was announced, and it fit right in,” said company President Shinya Nojima.
When the virus shut down Fujikin’s suppliers in China earlier this year, their customers became worried about shipments of parts. “Our customers were asking us: Is the China procurement happening? Are we going to be able to meet the deadline?” Nojima said Monday.
The coronavirus outbreak, and the lockdowns that followed, have forced businesses and government officials around the world to rethink their supply chains in order to reduce reliance on China as a manufacturing source.
Japan had already been a key player in Southeast Asia, home to some of Asia’s fastest-expanding economies before the pandemic and a growing and youthful population. Japanese investment into five of the region’s economies — Vietnam, the Philippines, Malaysia, Indonesia and Thailand — rose at nearly double the pace into China over the past decade.
Infrastructure development formed a big chunk of that investment, with Japanese firms vying with Chinese ones to build railways and hospitals in countries like Indonesia, the Philippines and Vietnam.
The U.S.-China trade war and worries about China’s growing dominance in Southeast Asia have fostered stronger economic ties between Japan and the region.
Japan is considered the most trusted major power among Southeast Asian nations, according to an annual survey by the Singapore-based ISEAS-Yusof Ishak Institute, released in January. Of 1,308 people surveyed across five professional sectors, 61.2% said they had confidence Japan would “do theright thing” to provide public goods.
That trust goes both ways, with Japan putting a net $139 billion into Vietnam, Thailand, Indonesia, Malaysia and the Philippines over the past decade.
“Even before coronavirus and the U.S.-China trade war struck, there was a shift away from production in China,” said Satoshi Kitashima, a deputy director at the Japan External Trade Organization.
Vietnam has emerged as the clear favorite for many manufacturers over the years, given its proximity to China, relatively low labor and power costs, and its openness to foreign investment. Kitashima, who had previously spent nine years in Vietnam facilitating business between the two countries, said there’s been a clear upward swing in Japanese direct investment into Vietnam since the global financial crisis more than a decade ago.
Fujikin’s Nojima says Vietnam’s wages are a 10th of Japan’s and lower than in China, while Kitashima says many firms are now moving to Vietnam with their focus on the nation’s young and rapidly growing domestic market. Investors also credit Vietnam for its stable political leadership and ability to contain the coronavirus outbreak, although the nation has recently seen a spike in cases again.
Of the 30 firms that secured Japanese government subsidies to expand production abroad to protect their supply chains, half of them will be using that money in Vietnam.
One of them is Showa International Co., a Tokyo-based business that’s been making clothes in Vietnam for 25 years. The pandemic has seen it ramp up production of medical gowns and masks, with Kazuo Nishizawa, head of the company, projecting it should be able to produce up to 150,000 gowns a month.
“There’s still a large shortage of gowns and masks,” he said. With demand surging across the world, “we have a mission to first be able to provide stable supplies to Japan,” he said.
In the first round of the new subsidy program, 57 companies shared 57.4 billion yen to boost output in Japan, and the 30 companies shared about 12 billion yen to increase output in other nations. That leaves around 174 billion yen that firms can apply for in the next round.
Indonesia, Southeast Asia’s largest economy and the world’s fourth most-populous nation, is another country that’s benefited from a surge in Japanese investment, including in Jakarta’s first underground rail network.
Japan was the biggest Asian investor in Indonesia in the first quarter, according to data from the central bank. In June, authorities announced that seven foreign companies will relocate their plants from China to Indonesia with a total investment value of $850 million. Three of them were from Japan, including electronics giant Panasonic Corp. and auto parts maker Denso Corp.
“FDI from Japan will remain high or even higher, especially because the second phase of the mass rapid transit construction project in Jakarta will soon begin,” said Yuliot, a deputy chairman at the Indonesian Investment Coordinating Board, who goes by one name. Another reason is “the relocation trend of Japanese plants from China to Indonesia,” he said.
Within Japan, pressure is growing to secure supply chains.
“In the past supply chains were put together solely from the perspective of economic rationale,” Akira Amari, a confidante of Prime Minister Shinzo Abe and a senior ruling party official, said in an interview last month. “Amid the coronavirus crisis, the thinking is shifting toward diversifying risk from the perspective of national economic security.”
In a worst-case scenario, the Thai tourism sector is expected to generate revenue of Bt676.7 billion next year due to the impact of the Covid-19 outbreak, Tourism Authority of Thailand Governor Yuthasak Supasorn said.
This represents a drop of 9 per cent from the previous worst-case scenario forecast for this year of Bt742.5 billion, a sharp decline of 75 per cent from around Bt3 trillion last year.
In the best-case scenario, the sector is expected to generate Bt1.52 trillion revenue next year, far lower than the Bt3.93 trillion predicted before the outbreak began.
If the sector quickly recovers early next year or in the second quarter next year, it will have revenue of Bt1.525 trillion of which Bt977 billion will be contributed by foreign tourists. The number of tourist arrivals is expected to reach 20.5 million next year.
If the sector recovers to a medium level during middle of next year or late in the third quarter, it is expected to generate revenue of Bt1.108 trillion of which Bt617.5 billion will be from foreign tourists. The number of foreign tourists is expected to reach 12.5 million.
If recovery happens late next year, the sector is estimated to post revenue of between Bt675.7 billion to Bt754.8 billion of which Bt296 billion will be contributed by foreign tourists. The number of foreign tourists is estimated at 6.14 million.
Investors were advised to beware of volatility amid the rise in gold price.
Gold price in Thailand was expected to hit Bt31,000 per baht weight, an expert said.
MTS Gold chief executive Nattapong Hirunyasiri said gold price in Thailand continued to rise, reflecting the uncertainty following the Covid-19 pandemic and unrest in many regions.
“People believe gold is worthy of investment, while there are various types of investments, such as gold bars, gold ornaments, gold contracts, and gold funds that meet the needs of people of all ages,” he said.
“However, investors must manage their investment portfolio carefully because the gold market still faces volatility, while they should study thoroughly before investing in this precious metal to prevent risks and create opportunity to take profits.”
He expected gold price to hit Bt31,000 per baht weight as the spot gold price continues to hit a new high due to the weakening dollar.
“Gold’s next resistance level is US$2,100 per ounce,” he said.
“Factors that are boosting the gold price are the Covid-19 pandemic, governments and central banks’ efforts to stimulate the economy due to uncertainty following the global economic slowdown, the US-China trade war, and blasts in Iraq and Lebanon,” he added.
Dow Unveils Future of Sustainable Packaging: INNATE™ TF Polyethylene Resins for Tenter Frame Biaxial Orientation
Aug 08. 2020
By The Nation
Answering industry demand for high performance, consumer convenience, and recyclability, Dow is excited to announce an innovative and revolutionary brand extension to the family of INNATE™ Precision Packaging Resins. INNATE™ TF Polyethylene Resins for Tenter Frame Biaxial Orientation are bringing commercial viability to a long-desired packaging goal: tenter frame biaxially oriented polyethene (TF-BOPE) films.
Compared to traditional polyethene (PE) films, the TF-BOPE film made with INNATE™ TF Polyethylene Resins for Tenter Frame Biaxial Orientation has higher mechanical properties and material rigidity, better optical and printing performance, and offers considerable sustainability advantages, including the potential for all-PE structures for recyclability.
Many valuable benefits
TF-BOPE films made using INNATE™ TF resins demonstrate many impressive properties prized across the value chain:
• Excellent optical properties such as transparency and glossiness
• up to 80% less haze compared to traditional PE films
• twice the impact strength and tensile modulus
• three times the puncture resistance and tensile strength of traditional blown PE films
• excellent flex crack resistance, even under low temperature
• good tearability for convenience-in-use
A more sustainable packaging solution
INNATE™ TF Polyethylene Resins for Tenter Frame Biaxial Orientation offer distinctive physical properties which can enable material substitution, film layer elimination, and/or downgauging, to reduce overall packaging materials.
The TF-BOPE film can be used directly as the printed layer of the packaging, allowing a combination of PE functional layers to achieve an all-PE structure, making it more convenient for recycling and increasing the sustainability quotient.
Applications are already on the shelf
Collaborating with a variety of value chain members, such as Guangdong Decro Film New Materials Co Ltd, CaiHua, NanCheng and KAIDA Group, commercial applications – including all-PE pillow pouches, recyclable SUP packaging, and liquid product SUPs – are now in the marketplace. Applications include rice bags, pet food bags, heavy-duty shipping sacks, liquid detergent pouches, and others. Case studies regarding some of these applications are available for review at www.dow.com/InnateTF.
More is to come through ongoing collaboration. Asia Pacific marketing director for Food & Specialty Packaging, Dow Packaging and Specialty Plastics, Kodak Xiao, stated: “As one of the leading materials solutions providers to the packaging industry, Dow hopes to collaborate with key stakeholders across the value chain to promote innovative and sustainable packaging solutions and promote the healthy and dynamic development of the industry. With its downgauging and recyclability potential, INNATE™ TF resins already offer answers to the plastic waste issue, and we believe more advantages can be found together.”
These successes come after more than a decade of efforts. According to Wu Chang, Asia Pacific director for Technical Services and Development (TS&D), Dow Packaging and Specialty Plastics: “Our Asia-Pacific regional R&D team engaged in intensive research into the future trends of the packaging market. This revolutionary product breaks through the limits of traditional PE products and showcases Dow’s futuristic and cutting-edge insights, as well as our strong R&D capacity.”
Since the initial release in 2017, Dow’s TF-BOPE resins have earned three prestigious awards: an Edison Awards Gold, an R&D 100 Award, and the Ringier Technology Innovation Award.
Jareeporn Jarukornsakul (Nation Photo by Tanachai Pramarnpanich)
Jareeporn Jarukornsakul
By THE NATION
WHA Corporation Pcl is preparing to apply digital technology to its business operations to cope with the changing normal standards and the uncertainty of the Thai economy, the company’s CEO and chairwoman, Jareeporn Jarukornsakul, said.
During the seminar “Turning Crisis into Opportunities: Digital Transformation for CEOs” held recently, Jareeporn said: “Digital transformation is a necessity that must be employed along with the business and people development. As an operator of industrial estates and a logistics provider, WHA is planning to use 5G technology and artificial intelligence in our data centre to serve customer needs as increasing numbers of customers are switching to remote operations to overcome geographical limitations.”
“AI technology will also help improve the efficiency of the company’s smart logistics platform that will help boost Thailand’s e-commerce industry, which is now responsible for 19.6 per cent of GDP, even further,” she added.
Jareeporn added that WHA is also planning to deploy a smart grid system in 100 per cent of industrial estates under its administration, which will be the first operator in Thailand to do so. “We have recently signed an MoU [memorandum of understanding] with the Provincial Electricity Authority [PEA], which will enable our industrial estate customers to buy electricity at lower price and sell excessive electricity directly to PEA’s grid for additional income,” she added.
When asked about the new Cabinet members announced recently, Jareeporn said that WHA is confident the new ministers will help strengthen the government’s effort in developing the Eastern Economic Corridor, which is the company’s target area.
“The new Finance Minister, Predee Daochai, and the new Industry Minister, Supattanapong Punmeechaow, both have extensive experience in their fields and have been working on EEC projects before, therefore key projects should be able to continue seamlessly,” she added.
Jareeporn added that the EEC was currently the strongest selling point of Thailand as an alternative to China where many companies are migrating out of to avoid the impact of the trade war with the US. “We need to push forward with the development of EEC projects as much as possible, or risk being surpassed by Vietnam as a better alternative in the next five years,” she warned.
Kiatnakin Bank (KKP) is cutting the number of unsecured loans it grants so as to reduce risks from the economic slowdown amid the Covid-19 pandemic.
CEO Aphinant Klewpatinond said the bank was more able to control risks from secured loans than from unsecured ones.
“About 3 per cent of our customers have unsecured loans and some have taken up the offer to suspend their repayments. Our focus on granting more secured loans should see the proportion of unsecured loans decrease automatically,” he said.
However, he said granting secured loans was not without risk amid high volatility in the economy due to the Covid-19 pandemic.
“We have to consider granting loans carefully because it won’t be worth it if [debt defaults] lead to collateral seizures and an oversupply of collateral assets that results in their value dropping,” he said.
“We will consider borrowers’ means, such as their income. If their business has risks, we may have to reduce their loan.”
He added that the bank has changed strategy to attract more customers with stronger dependability by, for instance, granting loans for buying cars that are popular in the market.
“This is not a time to cut interest to win the competition with other banks, because there are lots of risks at present,” he said.
“The bank will consider adjusting interest in line with the market,” he added.”
Consumers remain sunk in worry over Covid-19, politics
EconAug 08. 2020Pro-democracy activists launch a petition for 50,000 signatures needed for a motion to rewrite the Constitution at Thammasat University on Friday (August 7). Meanwhile consumers are worried about emerging political instability and the persisting impact of Covid-19.
By The Nation
Consumer confidence rose for a third consecutive month in July, but the index remains at a record low.
The Consumer Confidence Index moved to 50.1 in July, up from 49.2 in June, the University of the Thai Chamber of Commerce (UTCC) said.
“This is the third monthly increase in a row, but the index remains at a historic low since being launched 21 years and 10 months ago, Thanawat Polvichai, rector of UTCC and chief adviser to UTCC’s Centre for Economic and Business Forecasting, said on Friday (August 7).
The index rated the state of economy at 42.6, job opportunities at 48.4 and outlook for future income at 59.3 – far below the threshold of 100 and the lowest level in 21 years, he said.
Consumers lack confidence because they are worried about the threat of a second wave of virus infections, which will continue to drag down the economy and wipe away job opportunities.
On the positive side, the economy had bottomed out in the second quarter, Thanawat said.
However, consumers were delaying spending on durable goods such as cars and large household items over worry about their future income.
Consumers are also worried about political stability following the Cabinet reshuffle and almost daily student-led protests.
More political gatherings are expected after universities open next week, he said.
The Consumer Confidence Index was released on the same day that police issued a batch of arrest warrants for protest leaders. Pro-democracy groups have vowed to intensify their political activities in response to what they say is legal suppression of free speech by authorities.
Thanawat said newly appointed Finance Minister Predee Daochai and Energy Minister Supattanapong Punmeechaow are thought to have a strong understanding of the current economic situation. The government may need another stimulus injection of Bt200 billion to Bt300 billion and spend another Bt300 billion to rescue small and medium-sized enterprises (SMEs) with soft loans, he said.
Should the economy not continue improving this year, 1-2 million workers may lose their jobs, he warned.
The government could boost the jobs situation by allowing private companies to hire workers on an hourly basis, he suggested.
A survey showed consumers are expected to spend Bt9.98 billion on Mother’s Day (August 12) – down by 28 per cent on last year’s holiday.
“Facing high debt burdens and uncertain futures, more and more consumers are borrowing money from pawn shops, underground lenders and their relatives,” he added.
Charoen Pokphand Group (CP Group) has announced its subsidiary Ascend Commerce is paying Bt558 million to acquire Chilindo, a foreign e-commerce business headquartered in Hong Kong.
E-commerce has become a mainstream channel in the Covid-19 “new normal” era and represented another way to stimulate and revitalise the Thai economy, said CP Group CEO Suphachai Chearavanont, explaining the move.
Most importantly, e-commerce was the business of the future in the 4.0 era, he added.
Ascend Commerce is buying 100 per cent of shares in Chilindo in order to upgrade its Thai online shopping platform WeMall.
Investment in Chilindo will act as a pilot for the establishment of a Thai e-commerce platform that will help raise Thai e-commerce to an international level, Suphachai said. At present, the e-commerce market in Thailand is mostly operated by transnational businesses.
“To strengthen Thailand’s e-commerce, priority must be given to Thai SMEs, especially during this Covid-19 pandemic that has changed the behaviour of consumers. Through the acquisition of Chilindo, Thailand will have its own e-commerce platform, which can be regarded as turning a crisis into an opportunity, accelerating the development of Thailand’s digital economy as well as stimulating the country’s economy in time for the arrival of 5G technology,” said Suphachai.
He said the platform would provide a marketing channel for SMEs and Thai farmers to sell their products overseas.
Thailand’s Bt3 trillion e-commerce market is expected to grow by up to 19 per cent this year, with domestic online trading accounting for 1.5 per cent of private consumption or 0.8 per cent of full-year GDP, according to CP.
The Chilindo platform uses an auction model, with the minimum bid price set at Bt1 and all purchases traceable to guarantee sellers are genuine.
File photo: Vietnamese authorities conduct temperature checks in an effort to contain the covid-19 outbreak.
Jareeporn Jarukornsakul
Pro-democracy activists launch a petition for 50,000 signatures needed for a motion to rewrite the Constitution at Thammasat University on Friday (August 7). Meanwhile consumers are worried about emerging political instability and the persisting impact of Covid-19.
